The Australian dollar meandered its way through Monday’s trading session, finishing mixed against the major crosses.
Traders, particularly those in North America, were seemingly more interested in the solar eclipse than markets on a day when there were no major data events.
Here’s the Aussie dollar scoreboard just before 7am AEST:
AUD/USD 0.7936 , 0.0009 , 0.11%
AUD/JPY 86.47 , -0.08 , -0.09%
AUD/CNH 5.2935 , 0.0056 , 0.11%
AUD/EUR 0.6716 , -0.0011 , -0.16%
AUD/GBP 0.6151 , 0 , 0.00%
AUD/NZD 1.0824 , 0.0039 , 0.36%
AUD/CAD 0.9964 , -0.0013 , -0.13%
Against the US dollar, the Aussie continued to grind higher, undoubtedly helped by some enormous gains across base and bulk commodity markets.
“A decline in the USD and higher iron ore and base metal commodity prices assisted modest appreciation in AUD/USD,” said Richard Grace, chief currency strategist at the Commonwealth Bank.
In the absence of market-moving events in the early parts of the week, Grace says strength in iron ore prices, Australia’s largest goods export by dollar value, will likely support the Aussie in the near-term.
“High Chinese steel margins are encouraging Chinese steel producers to boost output which in turn leads to higher demand for iron ore. We believe this will continue to underpin iron ore prices in the near term,” he says.
The Aussie was also helped by a decline in US bond yields, something that acted to undermine the US dollar during the session.
While the Aussie continued to make ground against the greenback, it finished mixed against the crosses, likely reflecting position adjustments from traders ahead of the Jackson Hole Economic Symposium that will begin later in the week.
Although some expect some volatility to arrive from this event, particularly when it comes to the outlook for monetary policy from the ECB, Grace says this event is likely to disappoint investors.
“Our view is that policy changing speeches are not delivered outside of scheduled central bank policy meetings, so the Jackson Hole Symposium is likely to disappoint market participants that expect ‘game changing’ speeches to be delivered,” he says.
If Grace is on the money, that could make it a fairly boring week for traders given a dearth of major data releases ahead of the Symposium.
There’s next to nothing, including on Tuesday.
In Australia, markets will receive the latest ANZ-Roy Morgan weekly consumer confidence index at 9.30am AEST, although it’s likely to come and go without causing a ripple across markets.
There’s nothing else of note across the Asia region, likely ensuring that a combination of technicals, US politics and Chinese commodity futures will prove the most influential factors on movements in the Aussie.
Later in the session, markets will receive public-sector finances from the UK, German investor sentiment, Canadian retail sales and new home prices, Richmond Fed manufacturing index and weekly crude oil stockpiles from the API in the United States.
Of all those events, the Canadian retail sales figure appears the most likely event to generate short-term volatility across markets given speculation over the near-term path for monetary policy settings from the Bank of Canada.
An increase of 0.3% is expected in June, down from the 0.6% pace of May. Core sales, excluding autos, are expected to come in flat.
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